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Scales raises full-year earnings forecast after ‘exceptional’ first-half results

Agribusiness Scales Corp has raised its annual profit forecast after what chairman Tim Goodacre called an “exceptional performance” in the first half of the year.

The company’s horticulture division, which includes New Zealand’s largest fully integrated apple producer, packer and marketer, increased its underlying profit by 2.9 per cent to $38 million in the six months to June 30, as it raised prices to offset lower volumes and higher labour and delivery costs.

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Meanwhile, its food ingredients business benefited from demand for pet food, with underlying profits rising 46 per cent to $16.1 million as sales rose 30 per cent.

Underlying profits in its logistics business fell 25% to $3.6m, but managing director Andy Borland said this was of significant strategic value to the group, as it enabled all its horticultural customers to ship the 2021 crop during the global supply chain. problems and an internal shortage of reefer containers.

“Despite the challenges faced by each of our divisions, our business has performed exceptionally well both financially and operationally,” said Gudakr. “Because of the strong results in the first half of the year, Scales has updated its annual outlook.”

According to Scales, underlying profit for the first half of the year was $33.3m, up 15 per cent from the previous year. The company raised its guidance for underlying profit for the year to $32-37 million, up from a previous forecast of $27.5-33.5 million.

Shares in the weights jumped 7.8% to $4.82 this afternoon on the NZX.

The company is partially executing a 10-year investment and automation plan to boost productivity across the business.

The first phase of the plan focuses on post-harvest activities with the creation of a new Whakatu cold shop.

The bunker store next to the largest packing house was opened in time for the current 2021 season and has brought benefits including lower energy consumption, reduced double handling of fruit, which reduces fruit damage and labour costs, as well as reduced transport costs and carbon emissions.

The next stage in the plan is to fully automate Whakatu’s fruit packing facility within three to four years, which will significantly increase productivity.

The company said Whakatu will become one of the few fruit packing plants in the world to fully automate fruit processing, allowing it to pack fruit continuously, leading to improved freight and labour efficiency.

The company has also said it is considering automation and technological solutions at the orchard, which are likely to follow the upgrading of the packaging plant.